Natural gas futures slipped to Rs 201.70 per mmBtu on February 4 as participants increased their short positions as seen by the open interest. The price had dropped 2 percent the previous on the NYMEX.
Natural gas extended losses after opening gap down in the afternoon session. The price weakened as market players gauged the sustainability of recent cold weather in the US.
Market participants will take further cues from EIA weekly inventory data to be released later in the day.
Sunand Subramaniam, Senior Research Associate at Choice Broking, said, “Fundamentally for the current month, we are estimating MCX natural gas futures to trade bullish as weather in the US has been reported to be cooler in the on-going winter season, which is expected to further support the demand for heaters.”
With the US winter season in the middle phase, temperatures were expected to be colder in the month ahead but lower compared to the previous year. As per US CPC, the cooler weather conditions were expected to cover the whole of the United States, with extremely cold temperatures to be witnessed in the northern parts, he added.
MCX iCOMDEX Natural Gas Index fell 34.92 points, or 1.37 percent to 2,514.32.
In the futures market, natural gas for February delivery touched an intraday high of Rs 203.80 and an intraday low of Rs 199.70 per mmBtu on MCX. So far in the current series, natural gas has touched a low of Rs 169 and a high of Rs 219.80.
Natural gas delivery for February slipped Rs 2.70, or 1.32 percent, to Rs 201.70 per mmBtu at 1435 hours, with a business turnover of 8,443 lots.
Delivery for March edged lower Rs 1.50, or 0.74 percent, to Rs 201.60 per mmBtu with a business volume of 2,376 lots.
The value of February and March’s contracts traded so far is Rs 1,201.75 crore and Rs 38.84 crore, respectively.
Subramaniam expect a bullish trend for the coming weeks and recommended buying in MCX Natural Gas February futures at Rs 202/mmBtu for a target of Rs 230/mmBtu and a stop loss below Rs 188 on a closing basis.
Natural gas may remain under pressure ahead of the inventory report, however, any bigger withdrawal bigger than market expectations may result in some recovery, Kotak Securities said.
At 0909 GMT, the natural gas price was down 0.93 percent quoting at $2.75 per mmBtu in New York.
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